The Fed, as expected, has kept interest rates unchanged for now and will continue to monitor inflation and jobs data going forward for a possible future increase as early as September. A recent poll has shown that 32% of over 1000 people polled expect a rate increase in September, but a greater than 50% majority expect the increase to come December or later. GDP growth for the U.S. came in very light at 2.3% vs. an expected 2.9%. To make things more confusing, the government is changing the way GDP is calculated, and are revising prior numbers upward. Time and the numbers will tell, but for now, the markets were satisfied to get past the near term uncertainty, and stage a two day rally following five straight negative days. The S&P 500 has returned to the middle of its multi-month trading range, and peeked above the 50 day moving average. Options are a great way to trade markets in any direction. To get two hours of our very best beginner options training for only $99 (satisfaction guaranteed), click here: http://www.optionsuniversity.com/oua-starter/
Volatility spiked briefly from its lows to near 16 before dropping back into range and closing just above 13. Despite the relatively low volatility, the markets remain on edge as sentiment is still very cautious. Alan Greenspan remarked that Fed policy is not the only issue that markets must contend with, expressing concerns with the percentage of U.S. GDP that is spent on entitlement programs. It has grown in recent years from about 15% to 19%.
OVERSEAS: In overnight action, Chinese markets are getting throttled with volatility. Shanghai and Shenzhen are by far the most active having been up over 3% the day before, and now down by over 2% today. Valuations and speculations about the Chinese economy have created a very uncertain situation. Meanwhile the Nikkei is trading near its highs. Europe, on the other hand, is not volatile at all, and is broadly and quietly trading positively.
OIL: Oil inventories have resumed their downward trend, as gradual as that may be. Crude prices have increased to just under $49 per barrel, and inventories were reduced this week by 4.2 Million barrels after an increase of 2.5 Million barrels the previous week. Demand for gasoline has (up over 6% over the previous period), and refineries remain very busy.
JOBS: Jobless claims came in lower than expected at 267K versus an anticipated 272K. This is an increase over the 255K claims from last week, but the overall trend is continuing downward.
HOUSING: Though the housing market remains strong, the pending home sales index fell into negative territory in June, down 1.8%. Weakness was most pronounced in the Midwest and the South.
BIOTECH INSIDER: The immunotherapy space – still on course to exceed $35 billion and become the “backbone” of treatment for up to 60% of cancers in the next 10 years – is heating up faster than anticipated. In fact, Merck just invested in the next generation of therapies harnessing the body’s natural defenses by agreeing to pay up to $605 million for a biotech hard at work in the space. The deal brings with it an antibody created to put the brakes on the immune system, helping to strengthen an attack on cancer cells. Similar treatments allow a patient’s own immune system to recognize and potentially destroy abnormalities. While such treatments have been around for years, it’s just now being recognized as a new cancer weapon. One such company uses the chemical extract of a tree, as a key component of investigational vaccines to prevent infectious diseases, and therapeutic vaccines for cancer and degenerative disorders. To get access to our expert opinions on biotech opportunities, visit: http://optionswealthinsiders.com/biotechv2/
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